The Robin Hood Tax is the UK version of the Tobin Tax which was at the beginning of ATTAC in France ten years ago.

As an anti-poverty campaign, it is more pragmatic than the economic theories of Tobin Tax definitions or the political demands of the Attac network.

Supported by a coalition of 48 organisations, the Robin Hood Tax campaign spells out what the income should be spent on.

And in the spirit of our times, it uses Twitter and YouTube.

The video is set to private until the launch which is set to 0.05am in parallel with the 0.05% tax that Robin Hood wants to take.

However, Mervyn King, the Governor of the Bank of England, dismissed the idea of a Tobin Tax only recently, according to the FT.

Of course, this tax doesn’t get to the root of all evils, but at least it’s bound to capture people’s imagination!

Updates here.

As usual, Dr. Yunus advocates social business rather than call explicitly upon the financial elite.

As I write this article, the storm in the financial markets continues — stock markets in Asia, Europe and the US all are going through roller coaster rides, people fear bank runs and governments are pulling together trillion dollars worth of rescue packages. In this sadly crazy historic moment, when every current option is looking bleak and governments are busy cleaning up the private sector mess, perhaps it is a good time to look some distance into the future toward a gleam of hope for a kinder and gentler form of capitalism. My suggestion for that is to put together effective regional ‘social stock exchanges’ in each continent that can spearhead social good through capital markets. I believe Asia is ripe to take the lead in meeting this challenge.

What is a social stock exchange? It is a stock market where investors who care about social and economic returns buy stocks and bonds of companies that have strong economic and social returns. Interestingly, in a social stock exchange both not-for-profit and for-profit companies can participate. For-profit entities can either issue shares representing ownership in their companies or issue bonds. Meanwhile not-for-profit companies can utilise the stock exchange to issue bonds an action in itself that can bring operational accountability to the not-for-profit sector (as opposed to carte blanch donations from foundations).

Although Professor Muhammad Yunus discusses the idea of a social stock exchange in his latest book, Creating a World Without Poverty, and has been promoting it in lecture circles, the concept is not a new one. There are already several Social Stock Exchanges in operation or in the works, albeit each uniquely different from one another.

BOVESPA in Brazil was the first social stock exchange in the world. It was launched in 2003 with the objective of bringing together non-profit organisations and the social investors who are willing to support their programmes and projects. For BOVESPA investors, the return is solely in ‘social profit,’ where the investment brings about a more just society with opportunities for the poor and neglected. By providing capital for the non-profit organisations that list on this exchange and the providing social value for the investors who participate in this exchange, BOVESPA aims to change the labeling of non-profit organisations to ‘Social Profit Organisations’. So far about 43 Social Profit Organisations have raised capital through this exchange. However, trading of stock in this exchange is still a distant goal.

Europe’s answer to social investing is the FTSE4Good. Set up by FT Stock Exchange in London, FTSE4Good is an index for socially responsible investment. The definition of ‘socially responsible’ for this index is very broad and covers topics such as: working towards environmental sustainability, developing positive relationships with stakeholders, and upholding and supporting universal human rights. There are about 25 companies in this index. Given FTSE financial requirements, these companies are large for-profit entities which in many cases have very tangential effects on positive social change. Their ‘social mission’ often springs from the defensive posture of CSR rather than from a genuine effort to make positive social impact.

In North America, Green Stock Exchange (GREENSX) is attempting to become the Social Stock Exchange for that continent (and Europe). This Canada-based social stock exchange is aiming to launch by end of the year to trade shares in social businesses. GREENSX’s definition of social business is a business that makes a profit but benefits society as well delivering a triple bottom line return (economic, social and environmental return). GREENSX’s goal is to provide small green issuers access to public equity capital efficiently while ensuring liquidity for the investors. The success of GREENSX remains to be seen.

There is obviously a budding global interest in the notion of social stock exchange. Recently, Rockefeller Foundation donated $500,000 to the UK government to pay for a feasibility study for a social stock exchange. The Foundation picked UK as the site for the feasibility study because of the UK government’s support for social enterprises. Existing UK government initiatives include legal reforms for separate incorporation for social businesses and plans for a social investment bank funded with unclaimed assets held by financial institutions.

All this is encouraging in a global perspective; now, how about Asia and, in particular, Bangladesh? Bangladesh is a country that continues to produce remarkable social enterprises, and given the state of the country and the world, it can be expected to keep the pipeline of social innovation flowing. The limiting factor is, of course, capital. Let us move a few degrees east in longitude, and there is a country, which — though a small dot on the map — is wealthy, is a player in the financial markets and is itching to make a mark in social business. This country is, of course, Singapore. Singapore is ready, able and perfectly positioned to be the home of Asia’s first Social Stock Exchange. Bangladesh is ready, able and perfectly positioned to pepper that exchange with very effective social businesses. This is a match made in financial heaven.

Now, what’s the next step? It is very simply for the Bangladesh government to have the vision and desire to initiate a ground-breaking discussion with the Singapore government. Bangladesh is well positioned to make its mark in the next economic revolution of conscious capitalism. It can take its rock star social entrepreneurs Yunus and Abed — and get them to perform the ground-breaking concert for the social stock exchange for its potential partner Singapore.

Thus, my request to the Bangladesh finance ministry use this opportune moment — initiate the courtship and get Bangladesh on the global financial map. We are all waiting.
The writer is the regional managing director of Asia City Publishing Group and adjunct associate professor at Lee Kuan Yew School of Public Policy at National University of Singapore.

We welcome suggestions on how to spread the word further, especially how to encourage real change in the university courses and in the corporate practices.

The Time is Right for Creative Capitalism
Published: August 20, 2008
Author: Nancy Koehn

Executive Summary:

Bill Gates has it right. Business is the most powerful force for change in the world right now and gives the idea of creative capitalism real power, writes Harvard Business School professor Nancy F. Koehn. Key concepts include:

* No other set of institutions has the resources or the breadth and on-the-ground depth of business to deal with the world’s toughest problems.

* Five powerful forces are converging in this moment to support creative capitalism.

* All sizes and types of business—from start-up to multinational—have something to contribute.

Bill Gates has it right. Business is the most powerful force for change in the world right now and gives the idea of creative capitalism real power, writes Harvard Business School professor Nancy F. Koehn.

Editor’s Note: In a much admired and debated speech given at the World Economic Forum in Davos last January, Bill Gates said that many of the world’s biggest problems cannot be fixed by philanthropy, but instead require free-market capitalism—”creative capitalism”—to solve.

According to Gates, creative capitalism is “an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.”

Harvard Business School professor Nancy Koehn recently contributed an essay on creative capitalism to the blog Creative Capitalism: A Conversation, run by Michael Kinsley and Conor Clarke. We reprint her comments here with permission from the site. Readers should feel free to write their own comments on the Creative Capitalism site.

Readers are welcomed to respond to Koehn’s essay on the Creative Capitalism site/blog.

About Faculty in this Article:

HBS Faculty Member Nancy F. Koehn

Nancy F. Koehn is the James E. Robison Professor of Business Administration at Harvard Business School.

Social entrepreneurship and micro venture capital

Microfinance has been the rage in international development for awhile now. I would say it peaked when Muhammad Yunus, founder of Grameen Bank won the Nobel Peace Prize in 2006.

The rage today in international development is social entrepreneurship and venture capital investing in small and medium enterprises (SMEs). Social entrepreneurship targets base of pyramid development but a step above microfinance. Where as microfinance typically invests in small individual loans, social entrepreneurs invest debt or equity as business partners.

The places to start seeking information:
Ashoka.org
Technoserve

Social entrepreneurship funds:
Acumen Funds
Agora Partnerships (Ross is an intern there)
Endeavor (President is James Wolfenshon)

Blogs on social entrepreneurship:
The Green Skeptic
NextBillion.net

Where you can do it online:
MicroPlace
Betterplace

I recommend checking the links out. They each bring something new and enlightening.

A Capitalist Jolt for Charity

By STEVE LOHR
Published: February 24, 2008

IN the summer of 2005, Miles Gilburne and Nina Zolt had long talks over dinner in their Washington home about what to do next. For more than six years, Mr. Gilburne, a former AOL executive, and his wife, Ms. Zolt, a former lawyer, had supported a philanthropy that used books and online tools to enhance skills of inner-city students.

The program, which Ms. Zolt directed, had been moderately successful. Students liked writing online about books and sharing their ideas with Internet pen pals, including adult mentors. Many teachers embraced the project, called In2Books, and participating students outscored their peers in standardized tests.

Still, the costly venture grew only gradually, classroom by classroom. The couple had put $10 million into the charity, a “meaningful portion” of the family wealth, Mr. Gilburne says. “It was enough money that I did lie awake at night thinking about the size of the checks,” he recalls.

As philanthropy, the couple’s efforts, however worthwhile, weren’t sustainable. But their vision of using the Internet for communication and collaboration to improve education has taken on a new life — as a business.

Today, the once-struggling venture has morphed into a primarily for-profit enterprise. And the striking transformation of In2Books is emblematic of a larger trend: charities are changing their spots and making use of some of capitalism’s virtues.

The process is being pushed forward by a new breed of social entrepreneurs who are administering increasing doses of bottom-line thinking to traditional philanthropy in order to make charity more effective.

To make a fresh start, Mr. Gilburne attracted like-minded angel investors, and at the end of 2006 the group bought a for-profit company, ePals Inc., to expand on the original mission and support the foundation. The ePals company has grown and now offers classroom e-mail, blogs, online literacy tools and Web-based collaborative projects on subjects like global warming and habitats.

EPals says 125,000 classrooms around the world are using at least some of its free tools, reaching 13 million students, and its ambition is to become a global “learning social network.”

National Geographic is to announce this week that it is investing in ePals, based in Herndon, Va., and will supply educational content for the ePals learning projects. Worldwide distribution should get a lift from Intel, which will soon ship its Classmate laptops, designed for students in developing nations, with the ePals icon on the screens. And ePals is also offered for use on the low-cost computers from One Laptop Per Child, a nonprofit group trying to bring the content and experience of the Internet to children in developing countries worldwide.

Various versions of efforts like this are appearing across the philanthropic landscape as business-minded donors, epitomized by Bill and Melinda Gates and their foundation, have treated their charitable contributions more like venture capital investments. They seek programs that can be catalysts for broad changes in fields like health, education and the environment, they measure performance and results, and they encourage nonprofits to become more self-sustaining.

Yet to have the greatest possible impact, a further step down the capitalist road is sometimes needed, analysts and others in the field say. Muhammad Yunus, the microfinance pioneer and Nobel laureate, calls this next step the “social business.” The goal, according to Mr. Yunus, is to create ventures that more than pay for themselves — in other words, turn a profit.

Social business entrepreneurs, he writes, can help “make the market work for social goals as efficiently as it does for personal goals.”

PHILANTHROPIES are discovering that for-profit status and financing can be a useful tool. For example, many microfinance lenders, modeled after Mr. Yunus’s project, the Grameen Bank in Bangladesh, aim to make the crossover to profit-making institutions.

Mozilla, the nonprofit foundation that developed the open-source Web browser Firefox, decided that it needed a for-profit unit to accelerate its business activities and gain market share against Microsoft’s Internet Explorer. The business unit is freer to spend on marketing, charge for software service and technical support, and pay to compete for engineering talent in Silicon Valley.

Likewise, Google.org, the search giant’s corporate foundation, chose for-profit status to be able to easily make investments in for-profit companies including alternative energy start-ups like eSolar and Makani Power.

“Capitalism is a very mutable, flexible beast, and what we’re seeing is social entrepreneurs addressing some of these social challenges in profoundly different ways than traditional nonprofit organizations,” said John Elkington, co-author with Pamela Hartigan of “The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World,” a new book that was handed out last month to attendees at the World Economic Forum in Davos, Switzerland.

Even among its hybrid peers, ePals has evolved into an unusual combination of a business and a social venture. When Mr. Gilburne and Ms. Zolt established the for-profit arm in 2006, they attracted like-minded investors, acquired ePals Inc. and began hiring talented staff. They gave the original education foundation a 15 percent stake in the ePals company, and its endowment will grow if the business prospers. The nonprofit division is focusing on educational research and bringing technology into classrooms.

But the company is where the action is. “This needs to be a large business to have a really significant social impact,” Mr. Gilburne said. “We couldn’t do what we’re doing as a nonprofit.”

Very few nonprofits get big. Only 144 of the more than 200,000 nonprofits established since 1970 had grown to $50 million or more in revenue by 2003, according to a study published last year by the Bridgespan Group, a nonprofit consulting firm that advises philanthropies.

With the rising influence of social entrepreneurs in philanthropy, many nonprofits have sought to generate revenue to become more self-sustaining. But it is still rare for a nonprofit to cross the chasm to become mainly a profit-seeking business, as in the ePals experience.

“It’s tricky, but it makes sense when the business is highly aligned with the mission of the social entrepreneurs,” said Jeffrey L. Bradach, a managing partner of Bridgespan.

As a for-profit business, ePals can more easily attract financing for growth. But outside investors raise the risk that the original social ideals will be lost in a single-minded pursuit of profit. Mr. Gilburne has tried to avoid that pitfall by gathering a stable of angel investors among his longtime business friends, who bring not only money but also a shared belief in the promise of the Internet to improve education.

The group includes Stephen M. Case, the former chief executive of AOL; Mitchell Kapor, the founder of the early spreadsheet maker Lotus Development and an open-source software supporter; and Yossi Vardi, an Israeli Internet entrepreneur.

“None of our investors are interested just in making another financial score,” Mr. Gilburne said.

AFTER pooling their money, the angel investors bought the ePals company in December 2006 for an undisclosed price. Mr. Gilburne had watched ePals for years, starting when he was at AOL in the 1990s, and he saw it as the foundation on which to build an educational social network.

EPals started as a Web-based electronic pen-pal service in 1996, offering point-and-click tools that teachers could use to control how students use e-mail. A teacher in California, for example, set the controls so her class could communicate online only with a class in China that was engaged in a joint cultural exchange project.

Since the angel investors came aboard in 2006, the ePals work force has more than doubled, to 43, and the company continues to hire. It has improved the e-mail and blogging software and added links to outside resources, like National Geographic’s digital library, to its Web-based software for online projects.

“We were a small company with little capital,” said Tim DiScipio, a founder of the original ePals, who is the chief marketing officer of the revamped company under its new ownership. “But now we have the resources to really pursue the vision of social learning over the Internet.”

Until last fall, ePals charged $3 to $5 a year for each student e-mail account, but the service is now free. The effect of free distribution was immediate and dramatic. The number of registered users has nearly doubled, to 13 million, since September.

The growth and ambition of ePals have impressed National Geographic enough to make an investment and forge a partnership.

“We’re looking at them as a global network to distribute National Geographic content,” explained Edward M. Prince, the chief operating officer of the venture arm of the nonprofit scientific and educational organization.

The ePals team is betting that it can build a worldwide social network in education — a serious, controlled version of Facebook, for students in kindergarten through 12th grade. “When markets go digital, they go collaborative and sharing,” said Edmund Fish, the chief executive of ePals and a former executive of AOL, where he oversaw online education offerings. “That can happen in education, too. A learning social network is not an oxymoron.”

Even the basic social networking of ePals e-mail exchanges, teachers say, helps improve writing skills and stirs curiosity about other cultures. Mirjana Milovic, a teacher in Kragujevac, Serbia, says ePals has helped the 120 students in her school with their English-language skills. Their correspondents in Alabama and Kansas have also learned that jeans and Nike shoes are popular in Kragujevac but that the McDonald’s in town closed for lack of business.

“We usually prefer our domestic food,” wrote Marija, an 18-year-old.

Candace Pauchnick, who teaches English and sociology at Patrick Henry High School in San Diego, has been using ePals for what she calls “virtual field trips.” In their online exchanges with students in Italy, China and the Czech Republic, her students have learned about family life and political systems in foreign lands and improved their writing skills.

“If they were just writing for me, they wouldn’t be as careful,” Ms. Pauchnick said. “But they’re writing for a student in another country. It’s not drudgery for them. They buy in and they enjoy it.”

Ms. Zolt, the chief program architect of ePals, endorsed the for-profit route but insisted that the digital network also provide a free searchable database for educational research.

“The promise here is to be able to study, with vast amounts of real-time data, how children learn,” she said.

Scholars are enthusiastic. “Its potential is very exciting,” said Linda B. Gambrell, a professor of education at Clemson University, who is one of the academic advisers of ePals. “This should help us quicken the pace of translating innovative research into best practices in the classroom.”

Like many start-up companies, the revamped ePals is still working on its business model. Mr. Gilburne, the chairman, says it will pursue corporate sponsors for certain project areas. These could be part of a company’s community and social responsibility activities, providing approved adult experts to help students online. For example, General Electric might sponsor ePals’ global warming section by providing environmental experts as online mentors, Mr. Gilburne said, or perhaps Intel or I.B.M. would help in engineering projects.

There are commerce opportunities, Mr. Gilburne added, for education publishers who might want to market books or curriculum materials for home-school students over ePals.

Eventually, Mr. Gilburne said, advertising will be part of the mix. “But we’ll go gingerly to figure out what is appropriate and doesn’t impose on the classroom,” he said.

The failure rate for entrepreneurs — whether social or purely capitalist — is high. Still, ePals’ backers are betting that it is worth the risk. “These kinds of opportunities to do well and do good at the same time don’t grow on trees,” said Mr. Kapor, the ePals investor and a philanthropist. “But I do think that ePals could be one of them.”
]]> http://yunusphere.net/2008/04/19/nyt-24th-feb2008-a-capitalist-jolt-for-charity/feed/ 1 lilashana http://yunusphere.net/2008/04/06/fortune-3april-2008-muhammad-yunus-on-tech-profit-and-the-poor/ http://yunusphere.net/2008/04/06/fortune-3april-2008-muhammad-yunus-on-tech-profit-and-the-poor/#comments Sun, 06 Apr 2008 01:44:28 +0000 Lilly http://yunusphere.net/2008/04/06/fortune-3april-2008-muhammad-yunus-on-tech-profit-and-the-poor/ ]]> Muhammed Yunus on tech, profit, and the poor – Apr. 3, 2008

The Bangladeshi Nobel laureate wins yet another award – this time for contributions to technology. He talks to Fortune about where tech might take the poor.
By David Kirkpatrick, senior editor

Muhammad Yunus says a new model of business is needed to help the world’s poor.

NEW YORK (Fortune) — “Technology is making more changes in our way of life than ever in human history,” says Muhammad Yunus. “The way the Internet and the mobile phone are spreading, you cannot compare with any technology of the past.” Yunus is known for his visionary leadership in microfinance and helping the poor. He and the Grameen Bank he founded won the Nobel Peace Prize in 2006. Now he wants to see the tech industry work more explicitly to empower the poor.

Yunus has just been awarded the James C. Morgan Global Humanitarian Award by the Tech Museum of Innovation. The Tech Awards are to be presented in San Jose in November and are funded by chip-equipment maker Applied Materials (AMAT, Fortune 500). In addition to the Morgan Award, they annually recognize 25 people for visionary uses of technology to solve the world’s problems.

Yunus is an impatient man. Perhaps that’s why he has accomplished so much. In addition to the micro-lending bank, Yunus has created a variety of other businesses under the Grameen family of companies. It has helped create about 25 other companies or institutions in Bangladesh and around the world, including fish-farming and knitwear businesses and a provider of health-care services. But most of Grameen’s businesses have something to do with tech: Bangladesh’s largest cell phone company (which is also its largest private employer), an Internet service provider, an electronics manufacturer, a business IT consultant and a developer of high-tech office buildings.

Yet when he looks at the global IT industry, Yunus is deeply unsatisfied. “When we take tech that was designed for other people to the poor, it has impact,” he concedes, “but another way is to design it for the poor to begin with.” In our interview and in his recently-published book “Creating a World Without Poverty,” Yunus argues with passion for the invention of new tech tools, especially for poor women in the developing world. (Fortune’s Sheridan Prasso wrote about Yunus last year.)

You might think Yunus would be a big fan of the XO laptop from the One Laptop Per Child Initiative, designed for the children of the developing world. “It’s good. I’m not condemning it, ” he says. “But the most powerful thing would be to start from scratch. From the beginning they were trying to make a laptop, just one that was extremely cheap. I’m saying forget about the laptop. Just see what you will find.”

He explains his own vision for a “digital Aladdin’s lamp” – “a genie comes out of it and asks, ‘What can I do for you, ma’am?’ And she says ‘I make these baskets but nobody buys them.’ And the lamp says ‘I will find somebody to buy it.’ And the lamp comes back with buyers. She doesn’t know about a keyboard or a computer. She just asks questions of the genie.”

While an actual genie is unlikely, Yunus’ vision is not otherwise unreasonable longterm. Perhaps he should talk to another Bangladeshi, Emdad Khan, who runs a small Silicon Valley company called InternetSpeech. Just last week Khan appeared on a panel I moderated at a UN tech and development conference. InternetSpeech has an early version of technology that might help operate such a “lamp.” (Last week this column examined the extraordinary pace of global growth in IT demand, especially in developing countries. The data I reported about was compiled by yet another Bangladeshi, Imran Khan of JPMorgan (JPM, Fortune 500).)

Yet when Yunus explains how he wants to get from here to there, he rejects conventional capitalism. His book is primarily devoted to promoting something he calls “social business,” in which investors seek no monetary profit, but rather get only their initial financial capital returned. They would thus “profit” more by getting the satisfaction of helping others.

It’s a noble vision, but I’m pretty sure that the reason all those cell phones are getting into the hands of the poor worldwide is because for-profit companies are working hard to put them there. And I’m a disciple of C.K. Prahalad. His book “The Fortune at the Bottom of the Pyramid” argues persuasively that companies can make healthy profits and also help the world’s poor.

Yunus rejects Prahalad’s argument outright. “No, the poor are not a tool to make money,” he snaps. “They are a market you need to help. Rich people should not make money out of the poor people.”

As for today’s tech companies, he doubts they will bring about the changes he seeks, even though Grameen recently partnered with one of the biggest to create a new “social business” entity called Grameen Intel, which aims to bring broadband and educational computing to Bangladesh schools (in competition with OLPC). “Silicon Valley people are used to making crazy money, so non-crazy areas are left out,” he opines. “Some things nobody will lift a finger for.”

“I’m not saying all for-profit businesses should close down,” he continues. “Let them come. But another category of business needs to exist in the system.” He says Bill Gates was calling for something similar in his recent Davos speech about “creative capitalism.”

I applaud his passion. And I also agree when he says “Previously people at the bottom didn’t know what was happening at the top. Now tech is making it easy for everybody to see everything. If we do not pay attention to their needs it will not be as quiet as it was before.” (For a similar thought see a column I’m proud of, from back in 2001.)

Let’s try whatever it takes, be it social business or conventional business. Muhammed Yunus is right – tech will make an enormous difference.

First Published: April 3, 2008: 10:50 AM EDT</blockquote

Examples of some of Recipients of Skoll Awards for Social Enterpreneurship

Kashf Foundation

	http://www.kashf.org.pkSocial Entrepreneur: Roshaneh Zafar Grant Amount: $1,015,000 over three years Award Year: 2007
Click To Watch Videos About Kashf Foundation

A chance meeting with Muhammad Yunus inspired Roshaneh Zafar to quit her job and establish the Kashf Foundation in 1996. Ignoring warnings that a microfinance program focusing on women would not work in Pakistan, she enlisted the help of five women and used her own family’s funds to start microfinance centers. Kashf delivers collateral-free microloans, savings and life insurance products to poor women through branches that become sustainable within 18 months. Thirty-five percent of its clients move out of poverty within three years. Kashf made 228,603 loans during 2006, has 135,797 clients and maintains a recovery rate of 99.9 percent. It intends to expand operations to 1 million clients by 2010.

KickStart (formely ApproTEC)

	www.kickstart.orgSocial Entrepreneurs: Martin Fisher and Nick Moon Grant Amount: $615,000 over three years to help expand the distribution of irrigation devices into new markets in developing countries Award Year: 2005
Click To Watch Videos About KickStart

Martin Fisher and Nick Moon founded Appropriate Technologies for Enterprise Creation (ApproTEC) in 1991 and renamed it KickStart in 2005. The organization promotes sustainable economic growth and employment by developing and promoting technologies that can be used to run profitable small-scale enterprises. Working in developing countries in Africa, KickStart introduced low-cost, human-powered irrigation pumps that enable farmers to grow more crops and sell produce in the dry season, when prices are high and supply is low. Since its inception, KickStart has helped farmers start 36,000 new businesses in Kenya, Tanzania and Mali that collectively generate more than $38 million in new profits and wages per year. The new revenues are equivalent to 0.5 percent and 0.2 percent of the Gross Domestic Product of Kenya and Tanzania, respectively. Skoll funding will help KickStart strengthen its operations, develop two new products and reach 50,000 more clients.

These are some of the chosen parts from the conversation in London on 15th February (MY = Muhammad Yunus, LB= Liam Black):

MY

For a profit maximising company, the bottom line is how much money you make. But when you run a social business, it’s about impact. Ours was about impact on malnutrition in children. But you need to have measurement and we needed to understand the measurement of nutrition. If you have 100 units and you reduce it by one unit, it’s still a reduction. Measuring your success is different between a social business and other businesses. It is purpose driven and objective driven, not money driven. Measurement is a process and you have to build up to these things, but it can be done. If there’s a problem, it has to be measured. If we can’t measure it, we can’t do anything about it.

LB

I’m a great believer in social reporting and accounting and we (Fifteen) have just published our report. I have found a lot of people in the social enterprise sector reluctant to engage with reports and provide them. It’s where the cynicism from capitalism comes from.

MY

This leads us to talk about the social stock market. It has to be measured to gradually define the improvement.<

…..
MY

The point I make is it’s everybody’s heart, not just special people. Even the most greedy businessmen who make every pound for themselves feel that way. But there is only one road and the only thing we do is make money or charity. The companies making money are the big lorries speeding up the road and overtaking the small farmers pulling their carts. Now that I have built a new road, people say to me ‘here I am’. Social business will come with an unexpected amount of enthusiasm. People like doing things for other people and they want to do it, so why deprive them of that enjoyment. Life is about enjoyment and I am depending on that. These who take the first step are the ones at the front line.<

….
MY

Yes, there will be competition, but if Nestle is competing with Danone, and they are on the same side of the road, it is fine. In a social business we are purpose driven, not money driven. If I am trying to bring water to these people and they are trying to bring water to these people, then we are friends. We reach more people and we can provide even cheaper water.

LB

But what if we have a payroll to meet every month? I have seen it in the social businesses I have been involved in.

MY

What is the competition? If I am a charity and I go to a donor and don’t get the money, I close the shop, but in social business, you never close the shop. In the charity world, I go to the donor, spend the money and then go back to the donor. In social business, the money is recycled. There are thousands of people that need help. Why should microcredit compete if we are not interested in profit?

LB

But we need the profit to innovate, don’t we?

MY

If we are recovering the cost, we can repeat endlessly. This is a great year because we have reached another 20,000 people. They are safe and they don’t have to drink nasty water. On the financial side, we made a five per cent surplus, but the owners can’t take dividends, so no one can take that away.

LB

Innovation is driven by making money. Do you think the good heart of a chief executive of the social business is enough to drive innovation and create good products and services?

MY

My assumption is making profit is a driving force to push us into lots of things, like expansion. Similarly, doing good is a strong driving force. Can I make it easier? Do people have to walk a mile to get their water? Could I bring it closer than half a mile? Can I do it near their home?
<

….
LB

Your book got a hostile review in the Financial Times. The reviewer said that funding a social enterprise proposition relies on people giving up a return on their money, on the kindness of strangers. If the heart of the Grameen proposition is that a woman needs money to unleash her entrepreneurial drive and make money for herself, then it’s proposing a social business model that retains the profit. Isn’t that a contradiction?

MY

It’s different profit. It’s about her profit. She is making a profit to lift herself out of poverty and make a better life for herself and her family. When I brought this yoghurt to the children I didn’t say ‘we must get your parents to pay for it’. I said ‘this is a delicious yoghurt. Are you going to pay for it?’. It’s our conspiracy that whether they enjoy this lovely yoghurt or not, I give them some medicine. I didn’t create the Grameen Bank or Grameen Danone Foods to make money, I did it for the good of others. But why does it work? Is it because Danone wants to make money out of it? No, there’s no profit to be made.

LB

Well, I’m talking to the master here.

If there is a recession, what impact will it have on this?

MY

Some adjustment will have to take place. If we are looking for someone who makes a lot of money, they will be concerned about their money. They might wait until the next year to invest in something. Everyone will be cautious, but that will be everywhere in charity, business and social business. It will not mean everything closes down. The businessmen might say ‘I could lose millions on the stock market, so I might as well put my money in a social business’. At least they get back what they put in.

LB

It’s dependent on someone with enough money waiting to invest in social business. Will it be that that part of social business will always be dependent on capitalism?

MY

What’s wrong with that? This is supposed to be the means to an end. The real picture is here we make money and this is our money to do good for the world. That will stay in tact. People say ‘what am I going to do with these millions?’. Look at Bill Gates.
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MY

As long as you are a profit maximising business, your thinking process is about how to make money. Imagine you came to a business where you don’t have to make money, you just do good. Your thinking changes completely. A lot of things become relevant and irrelevant. If you are not making money, the packaging becomes irrelevant for example. You do not need to promote it. You use that money saved. You just think about delivering the real thing. People think that if they are not making money, they will not be interested in investing. It’s a common question I am asked. But they are not giving me money, they get it back.
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MY

If I am poor and I lived here, then wouldn’t a social business help me? In America, what about health insurance, which is a good sector to start with. We understand what it is, not being covered by health insurance and living in the US. I don’t have to tell you. You can do it because you don’t want to make money from it. Millions of people in the US don’t have a bank account because banks don’t see them as big enough. When they get their cheque from work, they don’t put it in a bank, they have to get it cashed. There’s a series of all these cheque-clearing shops and they rip them off. Loans are another one. Your car breaks down and you need it to get to work. For some, the only option is going to loan sharks, who charge you an extra 50 or 60 per cent. These are all uses of social business You have to look at the problems around you and be innovative.
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LB

If you had a magic wand and there was one thing you could do, what would it be?

MY

To have social business recognised as a businesses entity and define what are the norms and standards. As soon as social business becomes established, the fake people will get involved. They think secretly it will bring them money. The future needs to be innovative. Ask students to enter competitions to design packaging. Every time I speak to students I see overwhelming numbers who want to set up social businesses.

LB

Hopefully, you have helped bring some sanity to the world.

MY

I hope so.